June brings the annual Village property tax bill to our mailboxes. Let’s face it, taxes never go down. But we should try to keep the tax increases as low as possible. But the news lately has been grim.
Residents within the Village of Croton-on-Hudson pay property taxes to several different taxing bodies. These amounts are—from largest to smallest—the School District (Croton-Harmon or Hendrick Hudson), Village, Westchester County, and Town of Cortandt.
The biggest portion of our total annual property taxes—over half—goes to the schools. The pie chart slice for the school portion shown here assumes a property owner receives no school tax relief . Even for families with school tax relief, schools still represent about 45% of the total tax burden.
All annual expenses (labor, borrowing, benefits, materials, pension contributions, etc) for a local taxing body minus all annual revenues (state aid, grants, parking lot revenue, sales tax share, user fees, etc) equals the amount the body raises by property tax.
The amount of money the school district or village needs to raise by property tax divided into the total dollar value of all properties (“total assessed valuation”) determines the tax rate. The rate of taxation is usually expressed per thousand dollars of assessed property value.
The specific property tax amount we pay is determined by multiplying the assessed value of our property by the tax rate per thousand dollars of value. If the tax rate is $500 and my house as assessed value of $10,000 on the village or town books, then I pay $5,000.
Only the village taxes are based on the village assessment. All other taxes for a property are based on the town’s assessed value of the property and are collected by the Town of Cortlandt on behalf of itself, the County, the schools and library.
Usually, the village and town assessments yield pretty similar real property market values. Property taxes are quite simple; more valuable properties pay more tax than less valuable properties.
But sometimes the town and village values are far apart. In that case, property owners have the right to petition for relief from an unreasonably high assessment in a annual process called tax grievance. (Word to the wise: If you do decide to file a grievance, be sure to do your homework on why the village or town assessment produces an unreasonably high market value for your lot in comparison to similar lots.)
Together, the size of annual budgets for the school district and village determine 80% or more of our local taxes.
In the past decade the combined school district plus village budget total has tripled to $55 million. Non-tax revenues have not tripled. The increase for the Croton Harmon Unified School District reflects major new capital borrowing for renovations of all 3 schools in Croton.
Also,we have seen steep, recent inflation in operating expenses, especially mandated and unfunded entitlements (pension contributions, health care premiums, etc) that have hit all districts and municipalities sharply since 2004.
Some cost categories, such as interest rates for borrowing capital, are lower for a school district or village with a good bond rating than for a private sector firm. Nonetheless, the overall trend is sobering.
The value of all the developed, taxable land plays a key role in determining our tax rates. In the past ten years, the assessed valuation for all the properties that pay taxes in Croton has increased a minuscule amount (less than five percent). It has actually gone down since 2005.
The tax math tells us, the lower the total valuation , the higher the tax rate per property, and vice versa. One reason for a stagnant total valuation in Croton is that we do not have lots of undeveloped land being turned into new homes or businesses.
This year, for the first time, the Croton-Harmon School District tax rate climbed above the “$1000-rate-per-$1000-value” level. In 2007-8 we will pay more than $1000 in school taxes for each $1000 of our property’s town value assessment. This pattern is scary.
The Hendrick Hudson School District tax rate at $771 per $1,000 valuation for 2006-7 is lower than the Croton Harmon rate. An annual payment to the Hendrick Hudson district in lieu of taxes by Entergy’s Indian Point nuclear power plant has helped keep Hendrick Hudson rates lower than otherwise.
But this Indian Point payment declines each year. Hendrick Hudson district property owners will have to make up the difference, cut spending per pupil, or live with steeper than normal tax increases.
Are our school taxes high, because our local schools spend more than other similar districts? No! According to latest data from the US Census Bureau, our schools spend less per pupil than the average school district in Westchester County. In the chart below, Hendrick Hudson per pupil expenses are in black and Croton Harmon in white.
Some relief is possible from school taxes. Homeowners who apply to the New York State School Tax Relief (STAR) program see the school portion of their annual property tax bill lowered. STAR benefits for seniors are even better than for those not yet 65.
Every homeowner should take advantage of the STAR program. It can reduce annual school taxes by a few thousand dollars!
To quote the state’s FAQ: “The Basic STAR exemption is available for owner-occupied, primary residences regardless of the owners’ ages or incomes. Basic STAR works by exempting the first $30,000 of the full value of a home from school taxes. The Enhanced STAR exemption is available for the primary residences of senior citizens (age 65 and older) with yearly household incomes not exceeding the statewide standard.”
This month the New York State Senate passed a new school tax relief bill that would eliminate school property taxes entirely. Can you believe that?
To quote the press release of Senator Joseph Bruno dated June 13, 2007, “The New York “Stop Taxing Our Property” Reform Plan (NY-STOP) would: give school districts the authority to eliminate residential property taxes over five years, with revenue replaced by additional State funding; impose an immediate freeze on property tax assessments for seniors; create a Blue Ribbon Commission on Property Tax Reform and enact comprehensive mandate relief measures to help lower costs for school districts and municipalities.”
That sounds great! But the Senate bill failed to explain how it would pay for this $9.5 billion dollar tax break. Hence, the bill remains controversial and has been met with skepticism from the State Assembly and Governor’s office.
We’ll look at the village tax history in a future column, as well as some options for the managing the public purse strings.
Editor’s Note: The author is a former Village of Croton-on-Hudson Trustee who served three terms from 2001 to 2007.